In this edition of AcademyHealth’s Situation Report, we examine a draft FY26 budget that would dismantle major pillars of the federal health research enterprise, explore looming Medicaid changes that threaten funding for critical state initiatives, and analyze how immigration policies could worsen the U.S. health care workforce shortage.
Here’s what you need to know—and how you can respond:
- Trump Administration Eyes Deep Cuts to Federal Health Research in FY26 Budget Draft
- Medicaid Funding Shifts Impact State Programs and Health Research
- Immigration Policies Could Deepen Health Care Workforce Shortage
Trump Administration Eyes Deep Cuts to Federal Health Research in FY26 Budget Draft
A preliminary budget document obtained by The Washington Post reveals that the Trump administration is preparing a sweeping overhaul of the Department of Health and Human Services (HHS), proposing a $40 billion cut—about one-third of its discretionary budget. The draft “passback” from the Office of Management and Budget (OMB) outlines the administration’s vision for reshaping federal health agencies and dramatically narrowing the government’s role in health services research, public health, and social support programs.
The budget does not include a line item for the Agency for Healthcare Research and Quality (AHRQ), instead appearing to fold its functions into a newly created 'Office of Strategy' within the Administration for a Healthy America. While it does not explicitly zero out AHRQ’s work, the lack of a dedicated funding line or mention of its core programs (such as MEPS and HCUP) raises concerns about its future viability as the federal government’s primary health services research agency.
The National Institutes of Health (NIH) would see its budget cut by 40 percent, from over $47 billion to $27 billion. The number of NIH institutes and centers would be slashed from 27 to 8, with entire programs eliminated—including the National Institute on Minority Health and Health Disparities and the National Institute of Nursing Research. The Centers for Disease Control and Prevention (CDC) would face a 44 percent budget reduction, ending all chronic disease prevention and domestic HIV/AIDS programs.
A controversial plan to cap NIH indirect cost recovery at 15 percent is also revived in the draft—despite past legal and institutional challenges.
While agencies may appeal internal decisions, they’ve been told they cannot alter the proposed funding levels. The administration has already downsized HHS by about 20,000 employees through layoffs and buyouts, and many additional cuts appear imminent.
This leaked document is a good indication of what the President’s FY26 Budget will look like, but it is not the final FY26 budget. In any administration, the President’s Budget serves as a recommendation for next year’s budget, but Congress ultimately holds “the power of the purse.” It therefore falls to Congress to put forward a budget bill, pass it, and send it to the President for signature. However, given that Republicans hold majorities in both chambers, it is likely that this Congress will incorporate many of the Administration’s requests.
What Researchers Can Do
- Stay informed: This is a preliminary draft, but it signals intent.
- Speak up: Contact your congressional representatives with our Stand with AHRQ Toolkit. Share the toolkit with others to increase visibility of how HSR funding improves lives and saves money.
- Support AcademyHealth: AcademyHealth will continue to monitor the budget process and advocate for the essential role of health services research in improving health and health care for all. To support our efforts financially, consider making a donation here.
Medicaid Funding Shifts Impact State Programs and Health Research
The Trump administration's recent Medicaid policy shifts, including cuts to federal matching funds for state health programs, are poised to significantly impact health services research (HSR). The Centers for Medicare and Medicaid Services (CMS) has announced it will not approve new funding arrangements for initiatives such as rural broadband for health providers and in-home services, which previously received federal support through designated state health programs. This change could reduce the resources available for research on social determinants of health and innovative care models.
In early May, House Republicans are expected to begin marking up a major domestic policy bill, central to President Trump’s agenda, which includes $880 billion in spending cuts from programs like Medicaid. The Energy and Commerce Committee, under Chair Brett Guthrie, may start its markup the week of May 5. The proposed cuts, with $500–$600 billion potentially coming from health care including Medicaid, have sparked internal GOP tension and Democratic criticism. Opponents argue the plan could terminate coverage for millions and strain medical facilities. Recently, a dozen House Republicans sent a letter to the Speaker Mike Johnson, House Majority Leader Steve Scalise, House Majority Whip Tom Emmer, and Chair Brett Guthrie that stated they would not support a bill that cut Medicaid coverage for vulnerable populations. GOP leaders insist the cuts will only affect ineligible recipients and aim to impose quarterly eligibility checks and new Medicaid work requirements.
As the administration focuses on controlling Medicaid costs, researchers may face challenges in funding studies that examine the broader impact of Medicaid on access to care, quality, and health outcomes for vulnerable populations. Research suggests that the shift toward work requirements and other cost-saving measures are likely to lead to coverage losses, which could heighten health disparities and create new avenues for HSR on the effects of coverage reductions. Research demonstrating Medicaid's value, particularly in terms of cost-effectiveness and health outcomes, will be increasingly important as policymakers scrutinize the program's fiscal sustainability. AcademyHealth continues to bring experts to Congressional offices to share the most recent Medicaid research.
Immigration Policies Could Deepen Health Care Workforce Shortage
A new analysis highlights that over 1 million noncitizen immigrants—including more than 360,000 without legal status—currently work in critical U.S. health care roles, from nursing home aides to physicians. As the Trump administration threatens mass deportations and restricts legal immigration, experts warn these policies could exacerbate existing workforce shortages, particularly in nursing homes and home health, which are already struggling to staff up. Researchers also note growing fear and uncertainty among foreign-born workers, potentially driving talent to other countries and further straining care for vulnerable populations.
Previous Updates
This is the latest in a series of Situation Report updates from AcademyHealth. You can find prior issues here.
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